For some companies , paying a low tax is better than paying no tax . First , low tax locations often grant you more access to world-class banking , financial opportunities , and merchant services .
And paying small tax amounts can make the difference between your home country leaving you alone and giving you a hard time . As the global war on tax havens heats up , setting up your offshore corporation in a respected jurisdiction might be the best strategy for you . And in some cases , it might not even cost you anymore .
Common countries for offshore corporations
Common traditional offshore jurisdictions include Nevis , Seychelles , Mauritius , the British Virgin Islands , the Cayman Islands , Antigua , Anguilla , and even the Gambia in Africa .
Other low-tax jurisdictions popular for offshore companies include territories like Gibraltar , as well as low-tax European countries like Ireland , Malta , and even “ zero tax ” Estonia .
In Asia , places like Hong Kong and Singapore offer the potential for zero or single-digit tax rates for foreign business , as well as a network of global tax treaties .
Meanwhile , the Middle East is growing as an offshore hub , with Dubai and Bahrain offering their services to those interested in that region .
Tax implications of offshore corporations
We ’ ve talked a lot about how a big part of forming an offshore company is trying to reduce taxes or eliminate your tax burden entirely . In order to get the best legal results , you need to have the right team in place to manage your business .
Having the right team in place to manage your business once it is set up does two important things – It makes sure you are 1 ) in compliance and 2 ) making the most of all tax benefits .
Some higher-level offshore jurisdictions will require you to file annual accounts showing your transaction history . These include places like Hong Kong , Singapore , Cyprus , Gibraltar , etc .
Many traditional offshore jurisdictions may require you to keep books on your own , but they don ’ t require you to file them . Even if you don ’ t have to file reports or pay tax offshore , you might be required to declare your interest in any offshore company to the country where you ’ re a citizen or resident .
Forming an offshore corporation is about saving money and protecting assets legally , not hiding away or evading taxes . You want to make sure you ’ re not only aware of all the rules and regulations surrounding your home country and the jurisdiction of your offshore company , but that you ’ re complying with these rules , too .
Offshore company requirements for US citizens The US government has some tight restrictions on offshore companies .
As a US citizen , you ’ ll need to disclose any interest in an offshore corporation on your taxes each year . The same goes for any offshore bank accounts you are an owner of or signer on , in most cases .